World Trade - March 2009 - (Page 29) FedEx Freight, UPS Expand their Presence ‘South of the Border’ mongst logistics providers and freight forwarders, FedEx Freight and UPS rank in the vanguard when it comes to providing capability to facilitate U.S. supply chains expanding into Mexico. Previously regarded as problematic because of under-developed infrastructure and security issues, Mexico is experiencing a resurgence amongst companies looking to source closer to home. And, no small factor in that renewed confidence is the elevated presence of reliable U.S. transporters. Carlos Fallos, FedEx Freight’s VP, General Manager, Mexico has been doing business in that country for three decades. Over that time he’s seen lots of progress. “Fifteen years ago, the Mexican market was concentrated locally. All of that has now changed, most companies realize they can no longer prosper by catering to the local market and they have adapted very quickly and can go on a global scale.” Fallos points to both tangible and intangible change. “What is different today,” he observers, “is that the folks in charge of shipping in general have an education of high quality. They’re knowledgeable about logistics and have a high level of understanding about transportation.” The FedEx organization had been in Mexico for about ten years before FedEx Freight opened a sales office in 2000 which has since expanded into both U.S-Mexico delivery as well as intracountry within Mexico. There’s border-to-border,” explains Fallos, with off-on loading at Laredo or El Paso. “The Mexican government still has tight reigns on what comes into the country,” he notes. The LTL has to be delivered to Mexican forwarderbroker located on the U.S. side of the border who inspects the merchandize and papers, and assures that the government gets its duties. A second category is direct service from a U.S. destination to a Mexican one, where FedEx Freight’s Mexican dedicated carrier partner, Autolineas America (ALA, Mexico’s largest carrier measured by sales, with over 1500 tractors) takes over on the other side. “They created a separate LTL division exclusively for FedEx,” notes Fallos. “It is important to our customers that their cargo is being taken care of in a way that is consistent with FedEx standards.” Shipments on ALA are managed on FedEx Freight’s IT platform and visible in the U.S. “We have the most robust technology platform for any LTL carrier,” says Fallos. “What we did in Mexico was an extension of that platform. The operating system is identical to that in U.S.” Implementing a time-driven system posed A challenges in a business environment where time commitments had traditionally been lax. “It’s not unlike how LTL was in the U.S. twenty years ago prior to de-regulation where transit times were lax and not consistent,” says Fallos. “We wanted to bring to Mexico market the same reliability and security processes as in the U.S. We are raising the bar in terms of LTL transportation in Mexico.” UPS also has a long history in Mexico, starting out with small packages and, subsequently, express services. “We were in the game before NAFTA,” says George Post, Director of Marketing, Global Forwarding, UPS, “but NAFTA got us pretty serious.” The company’s Mexico business model entails UPS assets with significant air- and health benefits, and established mandatory work hours.” The low-cost labor advantage was wearing thin. Then came the jump in the price of fuel, adding considerable added overhead to the Chinese connection. As a result, we’re seeing an up-tick in near-sourcing. “You are not going to see the lights go out in China,” cautions Post, but there’s little doubt that Mexico is going to continue to grow in importance to U.S. supply chains (and as an internal market). “We have invested in our infrastructure over the past ten years as our customers and the economic conditions required. Our flexible network in Air Freight, Package, LTL and Ocean allows us to adapt quickly to these ever-changing conditions.” lift and ground capacity in the major industrial regions of the country, 54 operating centers for small package and supply chain solutions, 600 vehicles and 900 employees. In addition, there are brokerage operations at eight different border locations. As with other brokers and transportation providers, UPS has seen a sizable up-tick in its business south of the border. “As Asia’s influence increased in the late 90s, we began to see a reciprocal decrease in business activity in the manufacturing sector on the south border of the U.S. Many companies began to re-think their manufacturing and supply chain strategies at that point. Some migrated from Mexico to chase lower labor costs in southern and northern China.” Of late, however, things have changed. “The Chinese government enacted mandatory requirements for workers in areas such as retirement UPS Trade Direct offers a solution that lets companies bypass distribution centers by shipping directly to retail stores or customers’ doors. Leveraging the breadth and reliability of the UPS global network, Trade Direct provides consolidation of international freight, air, ocean and ground transportation, customs clearance and direct delivery to multiple addresses within the destination country, all through a single source. There are multiple UPS Trade Direct solutions— the UPS Trade Direct Cross Border solution offers pickup and delivery across Mexico/U.S. The UPS model makes use of its own fixed assets along with purchased transportation and alliances as circumstances require. In 2008, approximately 65 percent of the airfreight went by UPS assets and the rest via commercial airlines. As for small package, 90 percent moved on UPS assets. — Neil Shister, Editorial Director WWW.WORLDTRADEMAG.COM 29 http://WWW.WORLDTRADEMAG.COM
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